Stamp Duty, most would agree, is a tax that is badly thought through.
Working on a flat rate structure, the difference of just £1 in the purchase price of a property can mean a tax bill that differs by thousands of pounds. Hardly a fair system of taxation is it?
But while a few weeks ago I argued that Stamp Duty reform was a way off due to Whitehall needing to rebalance the books, it looks like I was wrong – well, for Scotland at least.
Holyrood is due to take control of Scottish Stamp Duty in 2015, under new devolved powers granted to the Scottish Parliament. And John Swinney MSP, Finance Secretary in the Scottish National Party-led administration, is wasting no time in reviewing the archaic tax.
• The proposals are in consultation at present and details are sketchy; but here’s a summary of the key points:
• Stamp Duty rebranded to “Land and Building Transaction Tax”
• No Stamp Duty to be paid on properties worth below £180,000
• Less Stamp Duty to pay on properties worth up to £325,000
• So, more Stamp Duty to pay if your property is worth more than £325,000
• Stamp Duty would only be payable on the proportion of the property that exceeds the banding, not the whole property price which is currently the case
• No details on the actual rates of taxation that would be charged
It’s very interesting that reform is taking place in a devolved, rather than central government, so I would be remiss not to consider the political context.
While my previous post postured that the Coalition would not reform Stamp Duty while the economic climate was uncertain (given how much of a money-spinner the tax is), the Scottish National Party feels the onus to prove themselves to the Scottish people in government.
Scottish independence is openly on the agenda, and a government that shows itself as more progressive, as “better” than central government in London, is going to gain sway with voters.
In another announcement John Swinney proposed a new body, Revenue Scotland, to collect tax (as opposed to HMRC). He says that this body would save £6 million per year.
Devolution has been a great success, and has produced governments that have shown themselves as capable and willing to take decisions that differ from Whitehall – just ask any English student how envious they are of the Scottish tuition fee system!
But like tuition fees, the UK may not follow suit. Will England, Welsh and Northern Irish property eventually be subject to a reformed Stamp Duty Land Tax that was the brainchild of the SNP? Surely politicians south, as well as north of the border, will be taking keen interest as this develops…